Michigan Court Rules on Workers' Comp Insurance and MSP Act

The Michigan Court of Appeals has provided significant clarity for the workers' compensation insurance sector, confirming that insurers can contest coverage questions without facing immediate double damages lawsuits under the Medicare Secondary Payer (MSP) Act provisions. This ruling is crucial for the industry as it impacts how payers approach disputes over regulatory compliance requirements.

The appellate decision, involving Conifer Insurance Company, overturns a prior lower court ruling. The case emerged from Linda Roach’s hip injury at a Battle Creek, Michigan lodge where her employment status was questionable due to unpaid wages since April 2017. Consequently, Conifer initially refused to cover her medical expenses, leading to Medicare making conditional payments.

Legal Context and Appellate Decision

Bronson Healthcare Group, having provided treatment, sued Conifer under the MSP Act for double damages after Medicare's provisional payments. A workers' compensation magistrate eventually ruled in Roach's favor, treating her as a covered employee, prompting Conifer's appeal.

Judge Brock Swartzle, on behalf of the appellate panel, emphasized that under the MSP Act, double damages claims require demonstrated legal responsibility from the insurer, achievable through judgment or settlement. This ruling challenges the Sixth Circuit’s previous stance allowing healthcare providers to seek double damages without proving an insurer’s accountability.

Implications for Insurers

This decision enables insurers to scrutinize claims, including employee status and incident legitimacy, without facing immediate financial penalties, provided disputes are in good faith. However, it does not protect insurers who unjustifiably deny coverage.

The ruling highlights the risk of early double damages lawsuits conflicting with administrative determinations, potentially resulting in insurers paying excessive claims outside the workers' compensation system. The appellate court directed the trial court to dismiss the suit without prejudice, allowing for a potential refile if Conifer Insurance does not reimburse Medicare following its confirmed responsibility.

For workers' compensation insurers, this ruling delineates a clear strategic framework for managing claims involving Medicare payments. It reinforces operational certainty in coverage disputes, aligning with federal law to contest claims effectively without the immediate threat of costly double damages litigation.